Introductory APR period
What is an introductory APR period?
An introductory APR period is the length of time after opening the card during which the APR will be lower than the card’s standard APR. When the introductory APR period ends, the APR increases to the regular rate. An introductory APR can help you save money on interest charges if you can’t pay your credit card in full when the bill is due, especially if you are making a large purchase or completing a balance transfer.
How does an introductory APR period work?
The introductory APR period usually lasts between 5 and 21 months. Once that time has elapsed, you will be charged the regular APR for the card—not just for new purchases, but on your existing balance, too. If the APR is variable, as it is on most credit cards, your new APR may be higher than the APR was when you applied for the card.
Credit card issuers typically offer introductory APRs on new purchases and balances transfers. Sometimes, there will be different terms, or different introductory APR periods, for each type of transaction. That’s why it’s important to read your statement and read the fine print before you apply for a new zero percent introductory APR credit card.
Using the Introductory APR Period for Purchases
When you open a credit card with an introductory APR period on purchases, any purchases you make within that time frame will enjoy a lower interest rate, usually zero interest. But here’s the catch: Once the introductory APR period expires, you’ll pay the regular interest rate on any remaining balance, backdated from when you first made the purchase. That’s why it’s important to create a plan to pay off a large purchase before the introductory APR period ends.
Let’s say you spend $600 on a new 4K TV with your new Capital One® Quicksilver® Cash Rewards Credit Card, which comes with a zero percent introductory APR for 15 months (15.74 to 25.74 percent variable thereafter). You take the $150 cash back rewards as a statement credit, leaving you with a balance of $450. With no interest, you can pay $30 per month for 15 months to pay off the TV.
Using the Introductory APR Period for Balance Transfers
Some credit cards offer a zero percent introductory APR period for balance transfers. If you can transfer balances from higher interest credit cards and then follow a budget to pay off the combined balance within the introductory APR period, you can save hundreds, even thousands, of dollars in interest.
You can use the Bankrate balance transfer calculator to see how much you can save based on your specific cards and interest rates. In nearly every case, transferring a high-interest balance to a card with a zero percent introductory APR period for balance transfers will help you save money and pay off your debt faster.
Let’s say you get a Discover it® Balance Transfer card, with a zero percent introductory APR period of 18 months for balance transfers (13.49 to 24.49 percent variable thereafter). There is a balance transfer fee of 3 percent on transfers within an introductory period (see terms) and up to 5 percent on future transfers. It’s important to put more than your minimum payment required toward your debt each month of the introductory period to fully maximize the balance transfer and get your balance as low as possible before you start accruing interest again.